Jobs are vanishing at the fastest pace in more than five years with pink slips likely to keep stacking higher in the months ahead, an urgent...
WASHINGTON — Jobs are vanishing at the fastest pace in more than five years with pink slips likely to keep stacking higher in the months ahead, an urgent signal the country may be careening toward a deep and painful recession just as Americans prepare to elect a new president.
Whether that’s Democrat Barack Obama or Republican John McCain, one of them will be dealing with the weakest employment climate in years.
Increasingly skittish employers dropped the ax even harder in September, chopping payrolls by 159,000 — more than double the cuts made just one month before. It was the ninth straight month of job losses. A staggering 760,000 jobs have disappeared so far this year.
The Labor Department’s report, released today, also showed that the nation’s unemployment rate was 6.1 percent, up sharply from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.
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“Washington, the labor market has a problem,” said Joel Naroff, president of Naroff Economic Advisors. “Firms are hunkering down and running as lean as possible. … We are likely to see more months of job losses before conditions turn around.”
The unemployment rate for blacks shot up to 11.4 percent, the highest since late 2003.
Even with Congress’ unprecedented $700 billion financial bailout, the faltering economy and the jobs markets probably will get worse. Many believe the economy will jolt into reverse later this year — if it hasn’t already — and will stay sickly well into next year.
The unemployment rate could hit 7 or 7.5 percent by late 2009. If that happens, it would mark the highest since after the 1990-91 recession. Some economists say the jobless rate could rise even more before the situation starts to get better.
Pressure is growing on Federal Reserve Chairman Ben Bernanke to do an about-face and lower a key interest rate in a bid to revive the economy. Many now think that will happen at the Fed’s next meeting on Oct. 28-29 or even earlier.
The hope riding on such a move would be to spur nervous consumers and businesses to spend more freely again. They’ve clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into chaos.
Today’s employment snapshot is the last before America goes to the polls in November.
Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on American voters.
White House spokesman Tony Fratto called the latest employment figures disappointing “but not unexpected given the shocks to the economy.”
The 159,000 tally of total job losses — government and private payrolls — was the most since March 2003, when the labor market was still struggling to get back on its feet after being knocked down by the 2001 recession. The picture was even darker for private employers. They cut 168,000 jobs last month, the 10th month of such losses.
The pink slips were widespread.
Manufacturers (especially automakers), home builders, retailers, securities and investment firms, hotels and motels, accountants and bookkeepers, architects and engineers, and legal services all cut back. So did temporary help firms — usually a barometer of future hiring. That overwhelmed employment gains by the government, in education, health and elsewhere.
Cost-cutting employers are getting rid of workers as companies chafe under all the economy’s problems. Companies announcing layoffs in September included Hanesbrands, Hewlett-Packard, Schering-Plough, Alaska Airlines and Alcoa.
Spooked consumers and businesses have pulled back so much that some analysts fear the economy could stall out — or even worse — shrink in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession.
“The economy was on the way down even before the latest tightening in the credit crunch,” said Nigel Gault, economist at Global Insight.
Wage growth for workers is slowing, meaning they’ll be more hard-pressed to spend and help the ailing economy.
Average hourly earnings rose to $18.17 in September, a 0.2 percent increase from the previous month. That was half the pace logged in the previous month. Over the past year, wages have grown 3.4 percent, but paychecks aren’t stretching as far because of high food and energy prices.
Strains on Americans were sorely evident. The number of consumer bankruptcy filings rose about 29 percent in September from a year ago, the American Bankruptcy Institute reported today.